Take the case of Wall Street Journal online edition. As a non-subscriber you can read some of their free articles but not the premium-subscriber only articles. You would like to have some of the articles but not ready to signup for the whole subscription, after all you do not want to pay for for content you can get for free from other sources or do not want to pay for the the opinion pieces that you do not agree with.
Your demand is about 3-4 articles per week. Suppose the WSJ unbundled its online edition and allowed people to pay per article. Let us ignore for now details like, how long can readers access the article etc. How would they price each article?
The WSJ at the newsstand costs $2 per day. So in theory, WSJ cannot price an article for more than $2. Or Can they? Take the case of what they do for articles sold through Factiva, a DowJones service. Factiva Individual subscription requires you to pay an annual fee, just for the ability to search for the article and $2.95 per article you view. The moment you click on a link to view the article you are charged $2.95. Since they have your credit card information, it is simply added up to your account.
Sample monthly charges
First Month:
Sign-up: $69.00 Viewed 10 documents: $29.50 Set up 1 Track folder: $9.95 -------- Total Charges: $108.45 Second Month:
Viewed 12 documents: $35.40 Set up 1 Track folder: $9.95 Existing track folder: $9.95 -------- Total Charges: $55.30
Of course the Factiva service is subscription service and not pure unbundled service. The entry fee is the access to years of archives. Then the articles are sold in unbundled manner. This is2-part tariff. Factiva website says this individual plan is for occasional users who buy a few articles per month.
In sum, unbundling does not mean you destroy value and lose pricing advantage. When getting the customers to commit to a higher subscription fee is difficult, it is possible to charge significantly higher fee per unbundled component when this offer is targeted to the right segment.
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Check out Malcolm Gladwell's latest book "Outliers" - he gives an excellent example of bundling by the Economist magazine - with a totally new take on it.
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